This is the second edition of the Economic Update for Equatorial Guinea. This World Bank report presents recent economic developments in Equatorial Guinea, the medium-term economic outlook and risks as well as structural challenges (Chapter 1), followed by a detailed exploration of a specific topic (Chapter 2). This edition focuses on fiscal instruments for sustainable forestry, examining the current socio-economic context of forest policy in Equatorial Guinea. In particular, it discusses the role and current use of forest-related fiscal instruments, and proposes options and trade-offs in the design of forest related fiscal policy reforms to adequately capture resource rents, promote forest based value-addition and employment, mitigate deforestation and forest degradation. The objectives of the Equatorial Guinea Economic Update are to: (i) strengthen the analytical underpinnings of the policy dialogue; and (ii) contribute to an informed debate on policy options to enhance macroeconomic management and development outcomes.
Authors
- Citation
- “ World Bank . 2024 . Equatorial Guinea Economic Update, 2nd Edition: Designing Fiscal Instruments for Sustainable Forestry . © Washington, DC: World Bank . http://hdl.handle.net/10986/42322 License: CC BY-NC 3.0 IGO . ”
- Collection(s)
- Economic Updates and Modeling Spanish PDFs Available
- DOI
- https://doi.org/10.1596/42322
- Identifier externaldocumentum
- 34400955
- Identifier internaldocumentum
- 34400955
- Pages
- 72
- Published in
- United States of America
- Region country
- Equatorial Guinea
- Report
- 193935
- Rights
- CC BY-NC 3.0 IGO
- Rights Holder
- World Bank
- Rights URI
- https://creativecommons.org/licenses/by-nc/3.0/igo
- UNIT
- EFI-AFR2-MTI-MacroFiscal-2 (EAWM2)
- URI
- https://hdl.handle.net/10986/42322
- date disclosure
- 2024-10-29
- region administrative
- Western and Central Africa
Files
Table of Contents
- List of Abbreviations 7
- Acknowlegment 9
- Recent Economic Developments and Outlook 11
- 1.1 Recent Economic Developments 17
- Global and regional recovery remains slow, with divergences across countries 17
- Recent Economic 17
- Developments and Outlook 17
- Equatorial Guinea reentered recession in 2023 amid a decline in hydrocarbon production and domestic demand 18
- The fiscal position has deteriorated amid a decline in commodity revenues, and public debt declined and remained sustainable 21
- Equatorial Guinea’s external position deteriorated on the back of declining export earnings 23
- Credit to the economy decreased significantly amid banking sector vulnerabilities and monetary tightening 23
- 1.2 Economic Outlook, Risks, Challenges, and Policies 24
- Global economic activity is expected to slow while SSA growth is forecast to accelerate in 2024 24
- The Equatoguinean economy is projected to remain in recession over the medium term 25
- Risks to the outlook are titled to the downside with the main risk being a faster-than-expected decline in the hydrocarbon sector 25
- Policy Watch, Structural Challenges, and Reform Priorities 25
- Designing Fiscal 35
- Instruments for 35
- Sustainable Forestry 35
- 2.2 The Importance of Forests: State of Forests and Economic contribution 38
- State and Trends of Forests in Equatorial Guinea 38
- The Role of Forests in Equatorial Guinea’s Economy and Climate Actions 40
- 2.3 Regional and International Context 44
- Financing for Sustainable Forest Management 44
- Implementation of the CEMAC Log export ban: a potential solution for increasing value added in the wood industry 45
- The EU Law on Deforestation-Free Products: A regulation that promotes sustainable forest management in the region? 47
- 2.4 The role of Environmental Fiscal Policy: Trade-offs in the Forestry sector 48
- 2.5 Survey of Forest-Fiscal Policy Instruments in Equatorial Guinea 51
- Recurrent Annual Charges 52
- Logging Licensing and the Auctioning of Forest Concessions 52
- Output taxes: royalties from harvested timber and stumpage yield taxes 52
- Business Income Taxes 54
- Tax Expenditures for Agriculture and VAT Exemptions for Farm Inputs 54
- 2.6 Opportunities for Climate-Smart Forest Fiscal Policy Reform in Equatorial Guinea 55
- Aligning the tax rates with the sustainability of timber production methods 55
- A ‘bonus-malus’ system in forestry: using taxes on non-sustainable production to finance tax benefits for sustainable practices 55
- References 61
- Box 1. The authorities highlighted their commitments to improve the sustainability of the Equatoguinean economy and public finances in the February 2024 Presidential decree 26
- Box 2. The digital economy offers a transformative opportunity for growth but is constrained by significant bottlenecks in Equatorial Guinea 28
- Box 3. What is REDD+? 42
- Box 4. An indicative trajectory of structural reform to transition from log exports to higher value-added processing 46
- Box 5. Cross-cutting issues in sustainable forest management 48
- Box 6. The impact of forest-related fiscal instruments on fiscal space 50
- Box 7. Lessons learned from fiscal reforms for forestry in Central Africa 57
- Table 1. Equatorial Guinea – Comparison in projections of key macroeconomic variables 19
- Table 2. Structural Indicators, Equatorial Guinea 31
- Table 3. Selected short term policy recommendations 33
- Table 4. Selected Approaches and Policy Instruments for Sustainable Forest Management 49
- Table 5. A selection of fiscal mechanism and their relative impact on incentives for sustainable forest management (SFM) 51
- Figure 1. Real GDP, percent change from previous year, 2021-2025 19
- Figure 2. Equatorial Guinea - Oil and Non-oil GDP growth (in percent), 2013-2023 19
- Figure 3. Equatorial Guinea and other CEMAC countries – Real GDP growth (in percent), 2021-2023 19
- Figure 4. Equatorial Guinea – Hydrocarbon production (in millions of barrels of oil equivalent), 2022-2023 21
- Figure 6. Equatorial Guinea – Contribution to Growth, supply (in percent) 21
- Figure 5. Equatorial Guinea – Growth in hydrocarbon production (y-o-y, in percent), 2023 21
- Figure 7. Equatorial Guinea – Contribution to Growth, demand (in percent) 21
- Figure 8. Equatorial Guinea – Composition and evolution of government spending, 2019-2023 22
- Figure 10. Equatorial Guinea – Public debt (in percent of GDP), 2019-2023 22
- Figure 9. Equatorial Guinea – Fiscal Balance, 2019-2023 22
- Figure 11. Equatorial Guinea – Current Account 23
- Figure 12. Equatorial Guinea – Composition of export value (in percent of total exports), 2022 23
- Figure 13. Credit to the economy in Equatorial Guinea, growth, 2014-2023 (in percent) 23
- Figure 14. Global growth (in percent), 1990-2025 24
- Figure 15. GDP growth in SSA and other regions (in percent), 2021-2025 24
- Figure 16. Equatorial Guinea and peers - Labor force participation rate, total (% of population ages 15-64), 2000-2022 27
- Figure 17. Equatorial Guinea and peers - Vulnerable employment by gender, (% of female or male employment), 2010-2022 27
- Figure 18. Equatorial Guinea and peers - Electricity access, percentage of the population, 2000-2021 28
- Figure 19. Equatorial Guinea and peers - Logistics Performance Index, 2018 28
- Figure 20. Equatorial Guinea and CEMAC – Worldwide Governance Indicators (percentile), 2022 29
- Figure 21. Domestic credit to private sector (in percent of GDP) and GDP per capita, 2021 30
- Figure 22. Equatorial Guinea and CEMAC countries - deforestation trend, percentage of total forest area, 2010-2020 39
- Figure 23. Equatorial Guinea - deforestation trend and categories, 2000-2022 39
- Figure 24. Forestry contribution to GDP in Equatorial Guinea 40
- Figure 25. Equatorial Guinea and selected countries - Wood product export value (US$ million), 2022 41
- Figure 27. Equatorial Guinea - GHG emissions by sector (million tons), 2020 41
- Figure 26. Equatorial Guinea - Wood products export value (US$ million), 2000-2022 41
- Figure 28. CAFI Budget transferred to countries million US$, 31 December 2022 44
- Figure 29. Equatorial Guinea, forest tax revenue, as a percentage of total tax revenue 53